Signposts for Smart Grid Progress

What is required if smart grid is to live up to its hype and full potential is a unified national effort led by the Federal Government to build high voltage DC transmission corridors creating an interstate transmission super highway system using smart grid technologies to crisscross North America.

Achieving this goal will be a tough political battle requiring that the Federal Government preempt the traditional state jurisdiction over transmission siting and project approval within states. Interstate projects would be regulated by the FERC but USDOE would need to take the lead using the authority given it under the Energy Policy Act to create the overall transmission super highway strategy. US DOE has such authority under the Energy Policy Act but has been cautious in using it. Meanwhile, the Western Governors Association had done some pioneering work on the concept of Competitive Renewable Energy Zones (CREZ) which recognizes the need for more high voltage transmission to get renewables to market.

The last unreformed segment of the electric power supply chain is transmission. Earlier efforts focused on creating independent system operators and merchant transmission companies shifted operational control of transmission away from vertically integrated utilities but did little to add sufficient new transmission lines to reduce congestion and speed the access to market for clean, renewable energy resources.

While smart grid brings new attention to the transmission and distribution (T&D) system and the potential for grid efficiencies, that still isn’t going to be sufficient to solve the real problems facing the grid. And with all the hype over the potential for smart grid and the willingness of the US Government throwing billions in stimulus money at it, there is strategy confusion over just what is the goal in this exercise. Is smart grid about expanding the use of renewable energy sources? Is it about encouraging energy efficiency? Is it designed to achieve emissions reduction? Public opinion seems to favor these policy goals, but does not yet realize what achieving them might cost. The choices being made have major implications for the electric utility industry and for consumers.

The Big Risk is Smart Grid will Focus on the Wrong Part of the Grid?

This convergence of forces focused advocating smart grid is focused on the energy delivery and customer demand end of the power line. The players tend to fall into one of three groups either IT companies interested in selling their network, sensor, meters or data management solutions to utilities; renewable energy developers trying to sell their projects to utilities, or policy advocates for cleantech or renewable energy or both.

The real options to achieve these goals include moving from an average priced, rate-regulated commodity energy delivery business model to a real-time priced, distributed generation and self sufficiency business model where commodity energy is just one component in a bundle of services. Those smart grid changes will get efficiency and demand response, but not a single new high voltage transmission line will be built if that is the primary focus on smart grid.

Signposts of Smart Grid Progress

USDOE NIETC Report to Congress. US DOE is required to deliver an updated report on the National Interest Electric Transmission Corridors (NIETC) program under which it has previously approved two corridors one for solar in the Southwest US and one for renewables in the Northeast. If USDOE announces a significant expansion of the number of NIETC corridors that will be a very good signpost of smart grid potential.

Real Life for CREZ. If the Western Governors follow through and act in a coordinated fashion (or refuse to block transmission across their state if needed by another to bring renewable energy to load centers) to implement their Competitive Renewable Energy Zones (CREZ) strategy that will be a very good sign for Smart Grid.

State High Voltage Transmission Construction. If individual states particularly in the WECC take affirmative action to move forward with in-state bulk transmission construction that will be a good sign. If NIMBY prevails as it so often does, then Smart Grid will require Federal preemption.

The jury is out about whether Smart Grid can live up to its hype and potential to reform the transmission segment of the electric power industry. The combination of better technology, robust interstate and cross-grid backbone corridors or high voltage transmission, and supportive Federal and State policies which use the stimulus money planned to execute the changes quickly will truly revolutionize the electric power industry. Anything short of that is just politics and subsidies as usual.